This study re-explored the nature of verbal short-term memory (STM) deficits in children with specific language impairment (SLI), by distinguishing item and serial order STM processes. Recent studies have shown serial order STM capacity to be a critical determinant of language development, relative to item STM. In Experiment 1, 12 children with SLI, 12 age-matched children and 12 language-matched children were administered serial order recognition and reconstruction tasks. Experiment 2 assessed implicit serial learning abilities via a Hebb learning task. The SLI group showed impaired performance for the serial order reconstruction and recognition tasks, relative to language-matched and/or age-matched control groups. However, normal serial position effects were observed in all SLI children in the serial order reconstruction task, suggesting normal coding of serial position information. Similarly, performance on the Hebb serial learning task was at chronological age appropriate levels. Experiment 3 showed that the group differences observed for the serial order STM tasks in Experiment 1 disappeared when the SLI group was compared to a mental age-matched control group. Experiment 4 showed similar performance levels in the SLI group and the mental age-matched control group for a nonword recognition task assessing item STM capacities. This study shows that children with SLI have no specific impairments for serial order and item STM components but that poorer general cognitive efficiency is related to functional limitations in verbal STM tasks. The data are in line with limited information processing accounts of SLI.